Venture capital and the great big Silicon Valley asshole game

Sarah_Lacy_6x6 BY SARAH LACY

ON OCTOBER 6, 2014
Screen Shot 2014-10-06 at 12.32.01 PM
This piece originally appeared on PandoQuarterly, issue three.
Silicon Valley has an asshole problem, and it s high time we owned up to it.
Let me be clear what I m not talking about. I m not talking about brogrammers. I m not t
alking about Google buses, or the evils of libertarianism. I m not even talking ab
out greed, or at least not in that Gordon Gekko sense.
Nothing that follows is about the fringe behaviors that crop up whenever a hot e
cosystem like Silicon Valley is observed from the safe and judgmental perch of E
ast Coast media, and wildly extrapolated to apply to everyone who has ever run a
startup.
Also, when I say Silicon Valley I really mean the tech startup ecosystem that s cent
ered here but stretches to New York, LA, and beyond. This article is a little ab
out misogyny, but it s principally about hypocrisy. That s the real sin here.
That s the problem.
I ve covered the tech
a hero or villain. I
u d want to set up on
VC s job is to invest

industry too close for too long to think of anyone as purely

don t expect that all great entrepreneurs are also people yo
a blind date with your best friend, and I don t expect that a
in the nice guy. The world just doesn t work that way.

And thank God. If it did we wouldn t have relational databases, iPhones, or any ot
her manner of innovations that have improved our daily lives. And frankly, other
industries like film, finance, or politics aren t held to that sort of good guy sta
ndard. Why should high tech be? Just because we moralize about changing the worl
d and doing no evil? (Yeah, we should probably stop that too, but that s another a
rticle.)
Here s the problem. Every venture capitalist, in every interview they ve ever done w
ill tell you the same casual lie: That they invest in people first and ideas sec
ond. They ll tell you they invest only in people they d want to work with. They ll tel
l you that they have the luxury to say no to companies that don t do things in lin
e with the way they like to work, the way they like to treat people.
You don t have to look too far into this year s frenzied pace of dealmaking, and at
the price tags of those deals to know that s complete bullshit. In all too many ca
ses, what venture capitalists are investing in is assholes.
It s weighing on those who ve been in the business for decades, and I ve been having c
onversations about it all summer. A senior partner at a top firm recounted a par
tner meeting at breakfast recently.
Why are we backing this guy?
ole.

he said to a younger rainmaker at the firm.

He s an assh

His partner replied: Hey, you gotta get over it. It s no longer about whether someo
ne is an asshole it s about can he make money.
That conversation happened a year ago. Said this multi-decade veteran of the bus
iness: It didn t use to be that way.

As an industry we need to think about what that means. Think about what the line
is either in terms of bad behavior or opportunity. Decide when an asshole is a fu
nctional asshole or just an asshole. Own it even. But most of all we need to sto
p lying to ourselves: This is an ecosystem with many successful nice guys, but t
hey didn t get funded by being nice.
Asshole rollcall
Let s name some of the biggest perpetrators of what I m talking about.
Snapchat. There s been plenty of intrigue and rumors about the behavior and ethics
of CEO founder Evan Spiegel around venture circles. He s never been considered a
warm and fuzzy guy, but the truly horrifying glimpse into his soul came from a b
atch of leaked college emails where he told his fraternity brothers to have some
girl put your large kappa sigma dick down her throat. And that wasn t even the wors
t. Spiegel has apologized, and the emails weren t written while he was running Sna
pchat, but nor were they written that long before. More worryingly, unlike a lot
of examples on this list, there appear to have been zero repercussions. Snapcha
t is rumored to be raising a round at a heady $10 billion valuation including part
icipation by the well-heeled Kleiner Perkins.
Uber. Where to begin with Uber? It s a company that prides itself on playing rough
and aiming to break laws. It has a self-described war room inside its new hard-ed
ged headquarters. It s played fast and loose with background checks on drivers and
with the truth. A Pando investigation earlier this year showed that a driver ac
cused of assault whom the company blindly defended had a criminal record that sh
ould have been caught in Uber s background checks. More recently, it s hired a campa
ign manager to shape the company s narrative. This is an area CEO Travis Kalanick
already knows plenty about, if we understand shaping the company s narrative to mean
slinging mud and misleading the public in an image war between Uber and taxi co
mpanies.
Not only has Uber vilified riders accusing their drivers of rape, assault or gen
eral bad behavior, they ve also betrayed all their drivers; Kalanick has said he c
an t wait to replace them all with self-driving cars. Time and again, he s shown he
is loyal to little more than his growing bank account and to the all-mighty free
market. The Verge recently exposed a campaign called SLOG, publishing internal
documents that detail a plan for agents to pose as passengers to recruit drivers
from competitor Lyft and vie to tie up their cars so they couldn t pick up passen
gers.
Oh. And in a recent interview Kalanick bragged about how many ladies he could ge
t with the success of the company referring to it as boob-er.
Uber has raised a jaw-dropping $1.5 billion, with its most recent $1.2 billion r
ound coming at a rumored $17 billion valuation. No one doubts egomaniacal storie
s like the one where Kalanick publicly offered a job to a well-heeled investor a
t the elite Goldman Sachs conference who asked an astute question of the CEO. St
ill, he s widely considered one of the best entrepreneurs of our age.
Secret. Most of the companies on this list and in this article do some good in t
he world, despite asshole-ish behavior on the part of the founders. You could ev
en argue that the same qualities that make Kalanick and Spiegel such assholes ar
e also what make them so incredibly effective as CEOs. Spiegel would need someth
ing a bit wrong with him to turn down $3.5 billion from Mark Zuckerberg, and Kalan
ick is just the kind of guy to think he can overturn the world s most powerful tra
nsportation lobby city-by-city. Perhaps nice guys simply couldn t do those things.
But Secret is the lone exception to any of that, and hence, for my money, the w
orst one on this list.

The company exists for the sole purpose of writing things without accountability
, and when Pando wrote about the concern for bullying and potential suicides, fo
under David Byttow replied on Twitter that we didn t drive enough traffic to the s
ite to address our concerns. This wasn t really too much of a hypothetical. The ap
p store ratings showed people actually boasting the service was a bully s dream.
Astoundingly, his head of PR Tweeted that it was hard when people wrote things a
bout her or her company without any accountability. Hey, at least we used our na
mes. Only after a subsequent story was picked up widely, on the front page of th
e Huffington Post and in Fortune, did Byttow change his tune. Weeks later, the c
ompany grudgingly admitted there was no context in which you anonymously write n
ice things about someone. He did what we recommended and blocked any posts with
specific names attached. Secret has raised $36 million including a $6 million cash
out for the founders.
Rap Genius. One of the most bizarre examples, in terms of a company engaging in
bad behavior without suffering immediate repercussions, was Rap Genius, now call
ed simply Genius. Co-founder Mahbod Moghadam was involved in a series of startli
ng incidents before finally being forced out. These included shady practices tha
t got the site penalized by Google and an annotation of the manifesto of Elliot
Rodger, who stabbed three people and shot three others outside of UC-Santa Barba
ra. Moghadam noted it was beautifully written and speculated the killer s sister mig
ht be smokin hot. The annotation was finally enough to have him pushed out of the c
ompany. However, a string of errors and abuses prior to this should have served
as a warning of what was to come. And sadly, if Genius was doing as well as Snap
chat or Uber, and he was the sole founder, he probably wouldn t have been fired. T
he company has raised a whopping $56.8 million from some of the largest investor
s in the world.
Tinder. Tinder s CMO Justin Mateen was accused by former VP of Marketing Whitney W
olfe of sexual harassment. She further accused the company, its CEO and its pare
nt company IAC-owned Match.com of knowingly letting these abuses occur and wrong
fully terminating Wolfe when she called the behavior into question. Mateen was s
uspended when the case came out. There are many unknown details of what actually
occurred here and even more conflicting accounts in the press. But, as we wrote
at the time, the news was unlikely to have any business repercussions for Tinde
r since it s not an ad-based business model, and it s already full owned by IAC and
hence not open to the whims of venture investors. Further, it s an app whose princ
iple selling point is about making snap judgements based on someone s appearance a
nd keeping them or discarding them. Not exactly a pearl clutching crowd when it co
mes to this type of behavior.
Crunchfund. Many in the industry were agog when it was reported that Crunchfund
had raised a second fund. Its controversial founder Michael Arrington (who is a
Pando investor and was fired from our board two years ago) was accused by an exgirlfriend of rape and abuse, a scandal that was widely reported and even writte
n up in a large Vanity Fair profile back in December 2013. The claims were retra
cted after Arrington sued his accuser but following the claims, several other fi
gures in the tech industry came forward to accuse Arrington of a pattern of abus
ive, bullying behavior to both men and women. But that didn t matter. Even before
the initial claims were retracted, investors had committed to a second fund.
And more to the point: Crunchfund wasn t exactly killing it. The biggest hits had
been investments in companies like Yammer and Tumblr which just got over the $1
billion Mendoza line. Even in those hits Crunchfund s partners invested too little,
too late for it to return the fund. Other early bets like Mailbox generated exci
tement but were acquired very early on.
A lot of this has to do with the bizarre co-dependent relationship between Arrin

gton and AOL. AOL which bought TechCrunch took the majority of the fund both times,
never mind this was a company that publicly and unceremoniously fired Arrington
before sheepishly hiring him back because it needed someone to interview big na
me founders at its conferences.
These may be some of the more public examples, but they aren t the only ones. And
behind each of these are more reports of fucked over partners, promises made and
then broken, and a general attitude that there are no repercussions for bad beh
avior. In fact, if you look at the valuations of Snapchat and Uber, it appears t
o be rewarded these days at higher and higher prices.
Sure, there are always assholes in entrepreneurship, partnerships, and life. But
let s compare today s crop of mega-startups to the three biggest social hits of the
early Web 2.0 wave: Facebook, Twitter, and LinkedIn.
People have debated the character of Mark Zuckerberg, but the people who know hi
m best rarely call him an asshole. Driven, intense, arrogant? Sure. But he s also as
siduously calculating and controlled about the impact of his actions.
Every venture capitalist will tell you the same casual lie: That they invest in
people first and ideas second.
Meanwhile neither of Twitter s founders Jack Dorsey or Evan Williams are known as
assholes even though they effectively ousted each other and aren t particularly clos
e to one another today. Williams even personally bought investors out of Odeo his
previous company because it didn t turn out the way he d hoped. He s a rare example of
a nice guy who finished first. His biggest flaw is his avoidance of confrontatio
n.
And LinkedIn? Well founder Reid Hoffman could make Mother Theresa look like a je
rk. The biggest investors in the early wave are much the same story. Peter Thiel
is considered cold and even eccentric, but is known to be intensely loyal and p
rincipled. (Whether you agree with his libertarian principles or not.) Ditto Mar
c Andreessen. And Greylock s David Sze is considered about as mean as Reid Hoffman
.
There s no denying that in less than ten years the caricature of consumer Web star
tup success has noticeably shifted.
The truth is a lot of really successful entrepreneurs aren t [humble, high integrit
y] people.
For months, I ve talked to more than a dozen top venture capitalists in Silicon Va
lley about this wild hypocrisy in continually saying they only back good guys in
the face of the obvious and mounting evidence to the contrary. None has argued
with the premise even when they are guilty of it. But none wanted to go on the rec
ord. The stakes are just too great. Well, almost none. There was one guy who d jus
t joined the VC ranks and couldn t help but be honest: Eric Vishria.
When top Silicon Valley venture firm, Benchmark, named Vishria as its latest gen
eral partner, I was shocked. Not because he wasn t deserving but because at a poin
t in the cycle when everyone is obsessed with big names, big logos, big mouths,
and big brands, Vishria is none of those.
With Vishria, they went for substance not flash. He d cut his teeth at the least s
exy of Marc Andreessen s companies, Opsware, and his previous company, Rockmelt, u
ltimately failed, selling to Yahoo in a face-saving, comfortable landing for the
team. Vishria isn t a guy who drives headlines, but one whose level-headed judgme
nt would matter tremendously in the board rooms of actual companies. I wrote as
much at the time.

Here s what I didn t write then: Vishria s answer to my question of what baggage he ll n
eed to get over to become a successful VC at the legendary firm that s backed eBay
, OpenTable, Twitter, Yelp and, in more recent years, Uber and Snapchat. When I d
last seen Vishria, it was just after he sold Rockmelt. He looked exhausted and b
eaten. Around the same time, Andreessen told him he was Valley depressed and he d kn
ow he was over it when he couldn t have a single conversation without mentioning w
hat could have been, but ultimately wasn t.
Screen Shot 2014-10-06 at 1.22.49 PM
I was expecting him to answer my question about what baggage he had to get over
with something about this heartbreak. Instead, what he said caught me off guard:
I like working with a certain kind of person. I like working with people who are
very smart, who have a little introspection, who have some humility, and high in
tegrity. People that have some kind of honorableness about them. That s how I atte
mpt to carry myself. The truth is a lot of really successful entrepreneurs aren t
those kind of people. I think that s something I have to watch out for. The models
that work are not always created by those kind of people, and I want to be able
to invest in them. That s the biggest thing.
Wow. Essentially, Vishria is admitting that investing with high integrity founde
rs is no longer a luxury the venture world can afford. Particularly telling as t
wo of his firm s biggest hits are Uber and Snapchat. In fifteen years of covering
this industry, I ve never heard anyone be quite so honest on the record about this
topic.
You can only lose your money once
For many I ve spoken to, it s hard to pinpoint when this new wave of assholes and ou
r acceptance of them began. Part of it may be the changing face of what the tech
industry is and hence what a product guy is. Kevin Rose of Digg not known as an assho
le was one of the first high-profile examples of a product founder who advised on lo
ok and feel and design and usability and experience but couldn t actually write a
line of usable code. He hired an outsourced freelancer to do so in the early day
s of Digg.
Since then, with the advent of mobile apps designing something and shoving it ou
t the door has gotten only more turn-key. Whether it s the open source stack all t
his stuff runs on, platforms like Facebook or the app store for distributing it,
the rise of services like oDesk and eLance, or hosting it all on Amazon Web Ser
vices, the tech part of a tech company has become commoditized at least compared to
the days when Silicon Valley actually made Silicon.
And because these founders need less money, they have fewer reasons to answer to
anyone. Said differently: The assholes of the past may have lacked the freedom
to let their asshole flags fly.
Not only has Uber vilified riders accusing their drivers of rape, assault or gen
eral bad behavior, they ve also betrayed all their drivers
At a recent PandoMonthly LinkedIn CEO Jeff Weiner noted that being an asshole wa
s way easier than putting in the work and showing the compassion required to be
a good leader. If no one is challenging them, many will simply take the easier r
oad. It may also be the sheer scale of the Valley startup machine these days. We
should remember that plenty of nice guys are also getting handsomely rewarded. Dr
ew Houston of Dropbox is hardly known for his bad behavior, nor is Brian Chesky
of Airbnb, and yet they are the two most highly valued companies to ever come ou
t of Y-Combinator.

The venture game itself has also had to change, along with these changes in scal
e and scope of the type of companies and founders funded. If you look at it acro
ss decades, the venture world moves more in fashions more than it does absolutes
. When I moved here, in the dot-com era, it was the norm to replace a founder wi
th a grown up more sales-oriented CEO. The pendulum has swung aggressively in the
other direction: Founders are gods within the four walls of their companies.
They have no respect for the fact that they are taking other people s money and it s no
t my money, it s pension and endowment money, said one prominent VC who has struggl
ed with the shift, but didn t want to be identified for fear of getting a bad name
with the new entrepreneur establishment. The attitude is You gave me the money no
w go away. Sorry, but that s not my job. My job isn t to run the company, but it s also
not to just go away.
At some point this business became about funding a founder, not a company. This
has coincided with three other theories of venture capital portfolio management
that have become prevalent of late. The first is an obsession with a VC s social ga
me to steal the parlance of reality TV. Since 75% of venturebacked startups are des
tined to fail, VCs today assume they ll do less damage overall by writing off a ba
d performer than doing the hard work to fix it. Even if they oust an ineffective
founder, a company may be too damaged to salvage, meantime, the VC has ruined h
is rep of being entrepreneur friendly for nothing.
The second theory is the new valuation math: Given basic liquidation preferences
and soft landings at bigger Valley companies, the risk to losing all your money
is somewhat protected. Likewise, companies like Facebook and Google have thrown
traditional valuation math out the window too, caring only if someone might dis
rupt them in another ten years.
So the only thing anyone cares about is the upside. VCs in this point in the cycle a
re smart to worry less about erring on the side of paying up too much for a deal
than erring on balking at a seemingly high valuation. Especially when the next
day Mark Zuckerberg could rewrite every rule by paying $2 billion for a hardware
company that doesn t even have a product on the market. As Bill Gurley of Benchma
rk says, You can only lose your money once if you invest. If you don t, you can effe
ctively lose that would-be appreciation many times over.
Without assholeswe wouldn t have relational databases, iPhones, or any other manne
r of innovations that have improved our daily lives.
Is it the mantra of a bubble? Maybe. But it s the mantra you need to adhere to if
you wanna get in any deals right now.
The third change that rules venture decision making is an acceptance that no one
has any clue of what works.
Is Snapchat all sexting? Apparently not.
Is Yo even a thing? Maybe?
Is Secret morally bankrupt? Who the hell knows! Just write the damn check and le
t s figure it out later!
The determiners of success in the Valley are no longer CIOs deciding on huge iro
n boxes that cost millions a pop. It s not even whether geeky early adopters will
like Twitter or FriendFeed more. It s what teens around the world want to do on th
eir phones. A hot mobile app has more in common with a movie premiere than a cla
ssic Silicon Valley tech company. And increasingly, VCs know they have no clue w
hat s a good idea and what s a bad idea. Better to back all the apps showing hockey s

tick growth on college campuses. Any VC would be happy to write off a dozen LikeA
Little s for one Snapchat.
Why do you think Mark Zuckerberg has Instagram, Whatsapp and Facebook Messenger
all operating as independent apps slugging it out with one another for supremacy
on the same campus? He knows to some degree this is all a crap shoot. And an in
sanely binary one that can end with pennies on the dollar or a $19 billion exit
in a few years.
Funding an asshole? Sure, OK. It may also break the stated venture capital playb
ook of investing in good people, but what is even left of that playbook these da
ys?
The Sean Parker effect
Others pinpoint the trend to the release of The Social Network as a turning point
in what was considered acceptable startup behavior. One of the reasons that the
outrageously fictional film was concerning to Valley insiders is that it glorifi
ed a story that wasn t true and one dotted with crazy misogyny, backstabbing, and ba
d behavior. While Facebook s founders and early team are hardly saints, the portra
yal was wildly off and celebrated the brogrammer culture that has become so revile
d.
At the time, VC Shervin Pishevar expressed concern that he heard young founders
worshipping this kind of behavior. Ironically, he s most known for his investment
and close involvement with Uber, a company that would come to define the trend f
or many in the Valley.
For me, it all started with the resurgence of Sean Parker. I first met Parker wh
en he was doing his press tour for the launch of Plaxo. A very early pre-Friends
ter prototype of the social network, Plaxo was seen as a ballsy bet by Sequoia s M
ike Moritz, because the mood had shifted heavily away from consumer Internet com
panies in the wake of the bust and Parker s previous company, Napster, had no shor
tage of scandal.
The bullishness faded quickly. The next time I heard about Plaxo, Moritz (not ex
actly known as a nice guy himself) was running Parker out of the company and the
re was a full-court press to sully his reputation by characterizing him as a dru
g-addled, unreliable womanizer. When he resurfaced as Facebook s president, the Va
lley still wasn t paying much attention to consumers, and the move didn t get a lot
of press, nor did his departure at the time. But when he joined Peter Thiel s vent
ure firm Founders Fund, the Valley establishment went wild.
I was writing a profile on Parker for Fortune at the time, and it was one of the
worst professional experiences of my career. Part of that was the frustration o
f spending that much time with Parker. While a genius and charismatic, he s also k
nown to be unreliable and manipulative. But far worse was the full-court press F
ortune and I got from the Valley establishment to outright kill the story. I was
told by some of the Valley s biggest names that no good would come of it: That Pa
rker was so toxic and so damaging that elevating him as a respectable VC would h
urt the industry. Around the same time Sequoia actually pressured its LPs at an
annual meeting not to invest in Founder s Fund, because of Parker s involvement.
Thiel ever the contrarian saw things more simply: Parker brought him Facebook, and w
hen he got in personal trouble, he stepped down without a fight. Thiel hired him
for two reasons: loyalty and the off chance that Parker may bring him another F
acebook. Shit, even a half-Facebook would make the gamble worthwhile. I ve always
admired Thiel for such personal loyalty in the face of what was an ugly smear ca
mpaign albeit one that wasn t altogether false.

But something strange happened between Justin Timberlake playing Parker in a mov
ie and the launch of Airtime: Almost all those investors who d tried to convince m
e there was nothing redeeming about Parker started salivating to invest in Airti
me. The narrative suddenly became that Parker had a Midas Touch never mind his own c
ompanies had never had huge success, nor that he d been ushered out of Facebook be
fore it hit the big time. Literally nothing about his track record changed betwe
en the exact same people telling me I d be blackballed in the Valley if I wrote a
story giving Parker any credit for anything good and them writing him a huge che
ck. The only thing that had changed was the Valley s way of doing business.
When I asked people privately about this change of heart, they shrugged. He had,
after all, discovered Facebook. He was a savant about the way the consumer Web
works and what users want. It was worth the gamble that he could be right.
We all know what happened: Airtime flopped hard. Amid early struggles, there wer
e conversations about whether or not Sand Hill Road should demand the money back
. Many of the investment firms would have no part of such a plot. Their reluctan
ce was due less to any great confidence that Airtime would find its footing and
more to wariness and the memory of how Sequoia had previously been punished for
pulling its support of Parker. It simply wasn t worth getting a few million bucks
back to risk the reputation as being non-founder friendly in today s Silicon Valley.
It s a sunk cost move on and bet again.
In defense of the assholes
The story of Sean Parker s bizarre transformation in the eyes of VCs demonstrates
how the venture game has changed. And frankly, those investors weren t necessarily
wrong to bet on him. This is a complex topic with no real right or wrong.
You have to consider what the job of a VC is. It s not to give inner city kids a h
elping hand; it s not to make mom-and-pop dreams a reality; it s not to help nice gu
ys. It s to maximize returns and fund companies that have an outsized chance of cr
eating billion-dollar plus outcomes in a decade or less.
There is a certain personality type that frequently builds these companies a mix o
f outsized arrogance, steel-eyed determination, and even some element of delusio
n. Rational thinkers don t usually think they can upend whole industries. People w
ho get impacted by social pressure will be talked out of an idea long before it
comes to fruition. And overly empathetic founders will struggle to make hard dec
isions and fire the people closest to them when they need to. If you don t come in
to founding a startup as an asshole, frequently the journey can make you one.
Further, even assholes can have an outsized positive impact on the world. It s har
d to argue there s anything positive in the case of Secret, but Uber certainly has
done good. Thousands of drivers are making better incomes and are in control of
their own businesses in ways they haven t been before, and I believe Uber will re
duce drunk driving as it grows and ripples through high schools and colleges. I d
happily prefund an Uber account for my kids in their teenage years instead of bu
ying them a car.
These companies also create thousands of jobs, make thousands of people into mil
lionaires, and provide high growth stocks that help increase pension and mutual
fund wealth around the globe. Horrible people can actually do great things. At s
ome point, doesn t the good of an entire new market outweigh the bad of one person
who got rich off of it?
This isn t entirely new. Read any biography of Steve Jobs, Jim Clark, or Larry Ell
ison. They weren t exactly the two-dimensional villains they are sometimes depicte
d as, but they weren t what you d describe as nice guys either. Clark one of only two

entrepreneurs in the history of the Valley to co-found three $1 billion plus exi
ts was said to make underlings shake nervously in his presence. Ellison s mantra was
reportedly, It s not enough that I win, everyone else must lose.
There s also the inherent subjectivity what makes someone an asshole. In working o
n this story, several people named people like Mark Zuckerberg or Mark Pincus or
even Nextdoor s Nirav Tolia as assholes. I know all three decently well, and while
hardcharging, competitive entrepreneurs who ve made mistakes or run roughshod over
others at times, I wouldn t necessarily put them in quite the same camp as a Davi
d Byttow or a Travis Kalanick.
But I say that as an industry insider who knows most of these people, their frie
nds, investors and in some cases their families. And I surely have my own person
al biases. Whether we boycott an organization or not as consumers shouldn t hinge
on everyone getting to know them. On the other hand, it s all too easy to get into
witchhunt territory, particularly when it comes to something like parsing colle
ge emails.
Let s face it: The press (or, occasionally, filmmakers like Aaron Sorkin) frequent
ly shapes and distorts these public figures into heroes or villains that will dr
ive page views (or box office sales). One of the great things about Silicon Vall
ey, to me, is that your track record speaks louder than Gawker or whatever Inter
net mob-du-jour is after you this week. These things, if inaccurate, typically d
on t stick, and don t have a huge impact beyond emotional distress.
Case in point: Bustle. Bryan Goldberg wrote a somewhat hamfisted story about the
launch of the women s site that got wildly twisted and distorted by an Internet m
ob. It even caused Google Ventures to agree to let Goldberg buy out their share
rather than keep supporting him a bit rich given the investment in Secret.
But most of Bustle s readers weren t in that microcosm, and didn t read the subsequent
New Yorker profile on Goldberg which referenced it. They just love the site. Fa
st-forward to August when Salon was asking how a bro managed to build a women s site
. Well, for one thing, because he was never the person the media depicted. He wa
sn t trying to mansplain anything to anyone. He saw a hole in the market and hired i
ncredibly smart female editors to build a great product while he does what he do
es best: build a media business around it. The outrage over Bustle has turned fr
om mansplaining to how dare he not be the stereotype we tried to make him into?
Ultimately my disgust at some of the behavior in the Valley aside I don t want to live
in a world where some preachy Internet mob is the arbiter of whether someone is
an asshole or not, taking people s jobs and the potential for a great company. Th
at said, there have to be times where it crosses a line.
The disturbing thing about many of the recent cases of bad behavior is how much
misogyny keeps popping up, just as women are starting to make significant inroad
s into the startup world. When it comes to race, for instance, some behavior sim
ply isn t acceptable no matter when you wrote it, whether you were running a compa
ny at the time, or what the context was.
Donald Sterling was forced to sell an NBA team based on remarks. Paula Deen lost
a TV show. Their context didn t matter. So how is it cool that people so blithely
chalk up the misogynist emails of Spiegel or the allegations against Arrington
as simply boys-being-boys?
No Longer a Gentleman s Game
It s a clich in business to talk about the twin forces of greed and fear driving ev
erything but when it comes to venture capital, it s slightly different. It s less gr
eed and fear than greed and regret. And mostly, regret.

It s a subtle difference. This was another thing Vishria shared with me as talked
about beginning his career as a VC. When I asked if he went into venture capital
because he wanted something easier than starting another company he said like many
VCs that venture is a harder job than it gets credit for. But he added that it wa
s a different kind of stress.
It s not as acute, but it s longlived, he said. The best VCs, when you talk to them, th
ey feel regret. I notice this time and time again, and it s only the best ones. Th
ey all are thinking about the ones they missed. We passed on that or We didn t hustle
hard enough. Every one of them has a story. It s really eye-opening when you are t
hinking about going into this field.
He s right. It s a standard question we ask VCs on stage: What is the big company yo
u passed on? What was the one that got away? And the problem is the truly big re
grets can t be forgotten because they seem to get bigger and bigger. Passing on Go
ogle seemed embarrassing in 2000. It made you want to punch yourself in 2005. An
d today as Google s market cap hovers at $392.5 billion it s horrifying. Ditto Faceb
ook. David Sze of Greylock was mocked for investing at a crazy $500 million valuat
ion. Today it s valued at $201.45 billion. The regrets of the Valley continually m
ock you and laugh in your face. And even one homerun can make a fund. Some 95% o
f the returns in venture capital come from 5% of the deals. Few people s jobs are
that binary.
Venture capital simply moves too fast, has too much competition with too little
inefficiency and friction, and the stakes are too binary for this to remain the
gentleman s game it once was. But sacrificed in that very real reality of what is
necessary to keep the lifeblood of this industry pumping are two sad realities.
One is that founders sometimes need to be kicked out of their companies even Steve
Jobs did for himself and Apple and Pixar to ultimately reach their full potenti
al. When companies get big enough, it shouldn t just be about the founders. It sho
uld be about the teams, the users, the customers, and even some service paid to
the product and idea itself. Should all of those forces be sacrificed to one per
son s ego and the fear that they could damage an investor s street cred?
The other sad reality is the continual erosion of what Silicon Valley as a place sta
nds for, if anything. This used to be a place of misfits and changing the world.
Even the legendary assholes had a cause beyond themselves and checks and balanc
es on their board. It just may take another economic collapse to get back to tha
t.
Screen Shot 2014-10-06 at 1.25.59 PM
Art by Brad Jonas for Pando
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Sarah Lacy
Sarah Lacy is the founder and editor-in-chief of PandoDaily. She is an award win
ning journalist and author of two critically acclaimed books, "Once You're Lucky
, Twice You're Good: The Rebirth of Silicon Valley and the Rise of Web 2.0" (Got
ham Books, May 2008) and "Brilliant, Crazy, Cocky: How the Top 1% of Entrepreneu
rs Profit from Global Chaos" (Wiley, February 2011). She has been covering techn
ology news for over 15 years, most recently as a senior editor for TechCrunch.